AN INTRODUCTION TO ORGANIZATION THEORY AND DEVELOPMENT

Course author/presenter: Mwangeka, Richard Mwambi, M.Ed. (Economics), B.Ed.

(Business and Economics, H. Dip (Business Administration), Dip. (Co-operative
Management)- Educator-Trainer and Management Specialist.

Introduction
The aim of this write up and presentation is to equip the inquisitive learner with a sound
knowledge of organizational theories and skills of developing appropriate organizational designs,
and decision-making process models. This is with regard to the changing nature of business
environment and therefore a need to enable managers to cope with change so as to achieve
organizational efficiency and effectiveness. The presentation has been developed from available
literature. Further study and research on inherent issues is highly recommended.

Key Words: Organization theory, organization development, action research model,

organizational change

Expected learning outcomes

At the end of the study, the learner should be able to:
1. explain various organizational theories
2. describe organization structures and the effect of size
3. explain the context of organization goals
4. explain the interfaces in organization size, growth and life cycle
5. describe the features of organizational culture
6. explain how group dynamics impact the work of organizations
7. describe the effects of power, politics and conflict management in organizations
8. explain informational and decision-making processes in organizations
9. discuss the effects of innovation, strategic change and organizational learning
10. explain the concept of Organizational development.

Detailed course coverage in this presentation is further described in the following table:

Topic Sub Topic

1 Organizational theories  Defining organizations
 Organizational challenges today
 Organizational theories

2 Structures and design  Nature of structure and design

3 The context of organizations
4 Organizational size, growth
and life cycles
 Elements of Structure
 Basic types of structures
 Organizational goals and effectiveness
 Organization goals at corporate and operational levels
 Organizational growth and size
 Effects of growth

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  Advantages of small size
5 Organizational culture  Definition
 Formation of culture
 Cultural indicators and manifestations
 Effects of culture in organizations
 Culture change
6 Group dynamics  Types of groups
 How groups influence organizational behavior
7 Power and politics in  Nature of power and politics in organizations
organizations  Use of power
 Politics in organizations
8 Informational and  The value of information
organizational decision  Systems of Managing information
making  Information and decision-making process
9 Innovation, strategic change  The concept of change
and organization learning  Dilemma of organization change
 Change process
 Types of organization change
 Organization learning
 Facilitating change
10 Organizational development  The concept of OD
 Action research model
 Managing O.D. process

Main Reference Text Books

 B. J. Hodge, Williams P. Anthony, & Lawrence M. Gales (2003). Organizational theory: A

strategic approach, 6th ed. Upper Saddle River, N.J.: Prentice Hall
 Gallos, V.J. Ed. (2006). Organization Development. Jossey-Bass. Available from:
http://jtelen.free.fr/0MARINE%20bouquins/%5BEdgar_H._Schein,_Joan_V._Gallos
%5D_Organization_Dev%28Bookos.org%29.pdf

These books form the bulk of this presentation in some systematic order preferred by the author.

Other Recommended Readings

The following readings are freely available via Google search engine and you are urged to make full use
of them to advance your study beyond the presentation notes:
 Laegaard J. (2006). Organization theory. Bookboon.com
 McAuley J., Duberly J., Johnson P. (2007). Organization theory: Challenges and perspectives.
Pearson Education Ltd.
 Stephen P. R., & Timothy A. J., (2017). Organizational Behavior. 17 th ed
Available from:
https://is.muni.cz/el/1456/podzim2017/BKH_PSEK/um/povinna_literatura/Robbins__S._P.____J
udge__T._A.__2017_._Organization_behaviour.pdf

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  Wendell L. French, & Cecil H. Bell, Jr. (1999). Organizational development: Behavioral science
interactions for organization improvement.

TOPIC ONE: ORGANIZATION THEORIES

This topic explores the evolution of organization theories that have shaped the nature, structure
and functions of all organizations.

LESSON ONE: ORGANIZATIONS AND THEIR CHALLENGES TODAY

Lesson Objectives

At the end of this lesson, you should be able to:

 define the term ‘organization’

 discuss the challenges facing modern organizations.

What are organizations and why are they an important subject of study?

Organizations are universal- they are present all over the world. They affect nearly all aspects of
human life: birth, growth, development, education, work, social relations, healthy and even death
(Hodge, Anthony, & Gales, 2003). Indeed, one of the largest organizations that we must all
conform to and live by its aspirations is the government; often established by a constitution
which is the supreme law of the land. Yet, very often our understanding of complexities of
organizations and organizational life is limited.

Organizational theory aims to achieve three important goals:

 build a basis for understanding organizations

 provide a foundation for working successfully in organizations and
 for participating in or initiating efforts to change and adapt organizations to new
conditions.

Organizational theory and management theory are closely related concepts. This is because a
manager must possess a sound knowledge of the workings of an organization in order to
effectively accomplish the managerial role. Consequently, an understanding of organizational
theory serves as a foundation for studying management.

Defining the term ‘Organization’

An organization is made up of two or more people working together co-operatively within

identifiable boundaries to accomplish a common goal or objective (Hodge et al., 2003)

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Three important aspects of organizations emerge from this definition:

 Organizations are made up of people - the human component is therefore important

because of its complexity nature of social relationships, variability and diversity.
 When people work together, various things become necessary. For example, the division
of labor among people and the need for specialized knowledge
 Organizations have identifiable boundaries such as people and membership and where
certain activities take place.
 Organizations are purposeful, goal seeking work arrangements. That is organizations
exist to pursue commonly held goals (Hodge et al., 2003).

Modern organizational challenges

According to Hodge et al. (2003), modern organizations face several key challenges as further
explained:

1. Managing organizations in a global environment – virtually all businesses are affected in

one way or another by a host of global issues – export import restrictions, e-commerce,
terrorism
2. Designing and structuring (or restructuring) organizations- For example, cutting back on
personnel and evolving new organizations
3. Improving quality, empowering organization members, and enhancing competitiveness- a
total quality management concept is now placed on the fore front with emphasis on
maximizing productivity and minimizing costs
4. Reducing complexity, increasing speed, and reacting to environmental changes – high
speed, high capacity computing, advanced telecommunications; and worldwide electronic
media coverage have increased the speed with which information is transmitted
5. Providing ethical and moral management of the organizations – Pessimists argue that
business ethics is an oxymoron - has contradictory connotations. Increasingly however
there is a heightened demand for ethical behavior and traditional business objectives and
operations to be consistent. Society no longer accepts any business that is purely run for
selfish gains.

Questions to reflect on

 Discuss the statement that, ‘organizations are ‘universal’.

 What are your personal perceptions and attitudes on the organizations you have mostly
interacted with?
 Are organizations necessary or unnecessary institutions in human life?
 How does your understanding of organizations make you a better manager?
 What common goals do all profit organizations seek to achieve; and which of these goals
is often in conflict with social ethics?

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  What challenges do organizations face in the global environment?
 What factors have influenced the structuring or restructuring of modern organizations?
 What is TQM, and why are organizations under pressure to adopt this concept?
 Explain the influence of ICT on modern organizations?
 ‘Business ethics is an oxymoron’. Discuss

LESSON TWO: ORGANIZATION THEORY AND MANAGEMENT PRACTICES

Lesson Objectives
 Explain the need for a theory to examine organizations
 Explain the types of theories
 Briefly highlight the history of organization theory

Why do we need a theory to examine organizations?

A theory is necessary to provide a systematic explanation of any study. A theory can be defined
as an explanation of some phenomenon, consisting of principles that state relationships observed
in association with that phenomenon (Hodge et al., 2003). Organization theory can therefore be
perceived as a set of related concepts, principles and hypotheses about organizations that explain
components of organizations and how they relate to each other.

Types of theories
Two major types of theories are identified (Hodge et al., 2003):
 Descriptive theory and
 Normative theory

A descriptive type theory attempts to describe the nature of the relationship among various sub –
systems of the organization and its environment. It provides a better perspective of understanding
organizations which leads to better management practices.

A normative theory, also referred to as prescriptive theory, suggests how things should be or
what can be done to conditions identified by descriptive theory. It informs managers about what
they should do. It therefore helps managers to seek to improve various aspects of an organization
so as to attain organizational efficiency and effectiveness.

A brief history of organization theory

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We briefly trace the history of organization theory so that we can appreciate the present
knowledge of organizations. We note certain overlaps in the evolution of management theory.
Many concepts of organizations can be traced to ancient times (Hodge et al., 2003). For instance,
there is a mention of organizations and organizing in ancient China and Greece. We also find
references to division of labor and delegation in the old testament part of the Bible. However,
modern organizations and their systematic study began with the Industrial Revolution in Europe.

The principle of division of labor

One of the earliest contributors to what is now known as ‘organization theory’ was a well
celebrated economist by the name Adam Smith (1723-1790). He demonstrated that, greater
efficiency can be attained through the division and specialization of labor. He based his principle
on a factory case in which through specialization and division of labor among workers, 10 people
could produce as many as 48,000 pins per day (Hodge et al., 2003).

Smith’s work laid the foundation for later organizational and industrial theories like those of
Max Weber and Fredrick Taylor. More importantly is the fact that issues of enhancing
organizational efficiency have preoccupied the minds of managers throughout the ages.

Max Weber and the rules of bureaucracy

Weber was a German Sociologist who became the most influential contributor to organization
theory in his time. He presented bureaucracy as an ideal form of organization which was simply
an extension of the Patriarch family organization model (Hodge et al., 2003).

Bureaucracy as proposed by Weber was a rational, efficient alternative approach for managing
organizations since it recognizes authority flows and relationships among organization members.
This enhances responsibility and accountability among members of the organization, thereby
leading to attainment of greater organizational efficiency and effectiveness.

The classical school

Organization and management theories in this category perceive organization issues from
different directions. We have two main proponents in this school: Fredrick Winslow Taylor
(1856-1915) and Henri Fayol (1841-1925). Taylor focused on rationalizing jobs beginning from
the lowest level of the organization. Fayol concentrated on providing a rational model for top
management of an organization (Hodge et al., 2003).

Taylor attempted to develop the principles of scientific management which some theorists in
later years considered them to be ‘dehumanizing’ and ‘exploitive of workers’ (Hodge et al.,
2003). He emphasized the need to attain efficiency and how management could maximize its
return on labor by employing his principles.
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According to Henri Fayol, the management functions of co-ordination and specialization are
extremely important; and co-ordination is best achieved using four of his principles:
 the scalar chain
 unit of command
 span of control
 expectation principles (Hodge et al., 2003).

Meanwhile, specialization was achieved by how departments were formed and how jobs were
grouped, therefore, the departmentalization principle.

The approaches of Fredrick W. Taylor and Henri Fayol have two things in common:

 they proposed the best way to manage organizations

 they attempted to develop rational techniques to help build structure and processes
necessary to co-ordinate actions in an organization (Hodge et al., 2003).

The Departmentalization principle

According to this principle, similar tasks or functions should be grouped within the same
department or unit. It also emphasized, a rational authority structure for organizations. This
attempted to devise one single best way of managing organizations. This somehow led to the
demise of classical theorists in the sense that, there is certainly no one best way of accomplishing
something (Hodge et al., 2003).

A number of researchers (in what came to be known as the human relations school) began to
examine the social human aspects of an organization. They preferred the normative other than
the descriptive approach, that is, a shift of focus from, ‘what was thought organizations should be
to what organizations real were like’ They also began to focus on workers’ satisfaction with a
belief that, ‘the key to organizational effectiveness is a satisfied work force.

The human relations school

This explored the role of groups and social processes within an organization. Several researchers
contributed to the development of this theory, however the most significant is Elton Mayo and
his Hawthorne studies (Hodge et al., 2003)

The studies questioned the rational, efficiency-oriented views of scientific management

principles. That, these were inadequate in so far as addressing the human side of enterprise is
concerned.

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More objectively, the Hawthorne studies found out that, workers were more responsive to group
involvement and managerial attention than to financial incentives. Therefore, group interactions
and social climate are important to job performance.

This school emphasized that, organizations were composed of people, who had roles and
responsibilities beyond their work organizations. Accordingly, effective social interactions and
relationships are a valuable asset to them and to the organization as a whole (Hodge et al., 2003).

Contemporary theorists adopting aspects of this school, emphasize such features like:

 informal structure

 power and political behavior in organizations

The contingency school

This school maintains that, the relationship among organizational characteristics especially
between structure and size, technology and environment, are dependent on the situational context
(Hodge et al., 2003). Therefore, there is no one best way of managing an organization. Only the
prevailing situation and circumstances will dictate the best way to manage an organization. To
succeed in a turbulent business environment, managers must employ varied management
strategies and tactics.

Contemporary perspectives

More recently, several new ways of viewing organizations have emerged (Hodge et al., 2003).
They attempt to address the short-comings of earlier suggested theories. Four of these theories
are:

 organizational economics

 institutional theory

 cultural perspectives

 ecological perspectives.

We briefly highlight each of them in this lesson.

Organizational economics theories

According to Hodge, Anthony, & Gales (2003), two theories based on industrial and
organizational economics include:

 transactions cost theory and

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  agency theory

Both approaches have a similar central focus: they view organizations as bundles of transactions
of contract binding workers and owners together.

According to Agency Theory, the primary interest of owners as ‘principals’ and workers as
‘agents’ are essentially different. Owners seek to maximize the return on investment by most
efficient use of the organization (including the workers). Agents on one hand seek to minimize
their efforts and maximize their remuneration (pay). To protect their interests, principals will use
various forms of contract and organizing to ensure that agents carry out their jobs.

The transaction cost theory explores the transactions taking place both inside and outside the
organization. They include transactions between managers and owners, managers and
subordinates, suppliers and producers, and sellers and buyers.

Both agency and transaction cost perspectives view the primary reason for organizing as being
the reduction of uncertainty that exists in typical transactions. Both theories believe that it is
human nature to act selfishly and in an opportunistic fashion. Consequently, the primary task of
managers and owners of organizations is to create structure and ensure that no one acts selfishly
and opportunistically (Hodge et al., 2003).

Institutional theory

This theory argues that social reality is constructed by organization members (Hodge et al.,
2003). The process by which actions are repeated and given meaning is defined as
institutionalization. It emphasizes the similarities among organizations, hence organizational
members bend to social pressures to conform to conventional or institutional beliefs. The result
is that managers often tend to imitate past practices and other successful organizations. This
tendency is usually not very health because it mars their creativity.

Cultural perspectives

This is an extension of the institutional theory. We tend to assume that the formally structured
organization as perceived and created by managers is the organization. This however does not
reflect the whole picture of an organization because it ignores the informal structures within an
organization (Hodge et al., 2003).

Cultural approaches are concerned with the whole organization – the formal structure as well as
the informal aspects of the organization. Culture is the result of organizational ideologies that
produce peoples’ norms, values and beliefs. If these are energized, they direct peoples’ actions
within the organization. That provides the rationale for cultural perspectives in organizations.

Ecological perspectives

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Ecology is concerned with the physical environment of an organization. There are two
perspectives of ecology that comprise groups of organizations (Hodge et al., 2003):

 community ecology and

 population ecology

Community ecology approaches to organizations assume that groups of organizations can work
together to control uncertainty in their environment. For example; retailers and manufacturers
can gang up together to pursue a common interest. For instance, they can forge a unified front
and influence government intervention through lobbying in order to gain some advantage or
leverage in their common business pursuits.

Population ecology suggests that the efforts to control environmental uncertainty may either be
ineffective or dead with wrong elements of the environment. As such organizations cannot
determine all of the important environmental threats that need to be managed. Instead the
environment itself naturally selects which types of organizations within their populations will
persist in the long run.

Questions to reflect on

1. Explain the importance of organizational theory

2. Briefly summarize the works of the following pioneers of organization theory:
 Adam Smith
 Max Weber
 Fredrick W. Taylor
 Henri Fayol
 Elton Mayo
3. Distinguish between normative theory and descriptive theory.
4. Explain the departmentalization principle
5. To what extent do you agree with the contingency school?
6. Evaluate the contributions of contemporary theories to efficiency and effectiveness of
modern organizations.

TOPIC TWO: ORGANIZATION STRUCTURES AND DESIGN

In this topic, we shall focus our attention to organizations structures and design that have
conspicuously shaped the formal organizations as we have them today.

LESSON THREE: NATURE OF STRUCTURE AND DESIGN

Lesson objectives

At the end of this lesson, you should be able to:

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  Identify two key elements of organization structure

 Distinguish between organization design and organization structure

 Explain the reasons for evolving organization structures

 Explain the appropriate time to develop a structure

The Concepts of structure and design

The two concepts are related in that they work together. The concept of structure as a whole has
two key elements:

 Differentiation

 Integration

Differentiation involves breaking the work to be done in an array of tasks. On one hand,
integration refers to bringing together for necessary co-ordination among the various tasks to
ensure that overall goals of the organization are achieved (Hodge et al., 2003). The structure of
an organization is usually depicted in form of an organization chart (see diagram 1)

Diagram 1

Source: https://www.tutor2u.net/business/reference/functional-structures

The chart shows the following elements:

 Authority relationships

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  Formal communication channels

 Formal work groups

 Departments or divisions

 Formal lines of accountability

Organization design and Organization structure

Organization design is a broader concept that includes structure as well as other related concepts
like:

 Unit grouping

 Unit size

 Planning and control systems

 Behavioral formalization – rules, policies and procedures

 Decision making

 Centralization or decentralization (Hodge et al., 2003).

By structure we mean the framework or body around which the group is organized. It may also
be viewed as the operating manual that tells members how the organization is put together and
how it works. More specifically, the structure describes how members are accepted, how leaders
are chosen and how decisions are made.

Reasons for developing a structure

The following are the major reasons why organizations develop structures:

 structure gives members clear guidelines on how to proceed – a clearly established

structure gives the group a means to maintain order and resolve disagreements.

 structure binds members together – it gives meaning and identity to the people who join
the group as well as the entire group itself

 a structure in an organization is inevitable (it cannot be avoided) – an organization by

definition implies a structure

 the structure is necessary for accomplishment of diverse tasks of an organization (Hodge

et al., 2003).

When to develop a structure

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It is important to deal with structural concerns during the early years of organizational stages of
development. Nevertheless, the same process shall continue as the organization grows and the
need for structural modification arises. Usually organizations undergo change as they grow and
therefore need a change in structure (Hodge et al., 2003).

Questions to reflect on

1. Distinguish between the term’s ‘differentiation’ and’ integration’

2. Describe the elements in an organization chart

3. Distinguish between ‘organization design’ and organization structure

4. Discuss the reasons for establishing organization structures

5. When should organizations get more focused on developing their organization structures

LESSON FOUR: ELEMENTS AND TYPES OF ORGANIZATION STRUCTURES

Lesson objectives

At the end of this lesson, you should be able to:

 Identify elements of structures

 Describe the basic types of organization structures

Elements of structure

It is important to note that, regardless of whatever type of structure adopted by the organization,
the following key elements shall always be present:

 Some kind of governance

 Rules by which the organization operates

 Distribution of work

These elements are critical to effective facilitation of day to day functions of the organization.

Basic types of organization structures

The following three basic types organization structures have been identified:

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  Functional Structure

 Divisional structure

 Matrix structure

These are further described according to their features, advantages and disadvantages.

Functional structure

This is the most common form of structure. It depicts the organization according to its main
activities, and functions. For example; production, sales, and accounting. All similar specialized
activities are grouped together into interdependent departments. A manager is placed in charge of
each department under the overall control of a senior manager or owner. For Illustration refer to
diagram 1.

The main advantages of a functional structure are:

 specialized resources are used efficiently

 quality is enhanced by other specialists from the same functional area

 opportunities exist for effective division of labor

 evolves a career structure that enables people to advance their functional specializations

 it is easier to manage specialists if they are grouped together and especially when the
manager has the same experience

 it fosters communication between specialists and enhance the development of skills and
knowledge

 it does not duplicate specialist resources throughout the organization, therefore promotes
economies of scale

 its suited to conditions which emphasize functional specialization where the environment
is stable, and when the technology is routine and requiring little interdependence between
departments.

The main disadvantages of a functional structure are:

 Inefficient co-ordination of functional departments

 Responsibility for overall outcomes is not clear

 Interdepartmental conflicts often arise

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  There is little creativity and innovation

 There is a difficult in identifying profitable and non- profitable products

Due to these disadvantages, a more flexible and responsive form of structure is needed than the
rigidly functional type.

Divisional Structure (Holding Company)

By adopting a holding company or divisional structure, the disadvantages of a functional

structure are overcome. In this case, profit sectors based on particular products or geographical
areas are created. It does not consider functional specialists, but rather groups’ activities
according to product or geographical area. This ensures closeness to customers which is not
possible with a functional structure (Hodge et al., 2003).

The key advantages of this structure are:

 provides excellent co-ordination across functional departments

 since departmental units are small and self-contained, employees will identify with the
product or project rather than their own function

 the structure is well suited to changing environments.

The key disadvantages are that:

 there may be a costly duplication of resources across departments

 specialists may become isolated and fail to further their special skills

 the company demand on people may cause stress

 co-ordination across divisions is difficult.

Divisional structures take the form of product or geographical structures. In the product
structure, people are grouped according to organization products. In the geographical structure,
products are grouped according to sales areas or regions that are closer to customers.

The Matrix Structure

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Divisionalisation may eventually be adapted to include some formal mechanism to promote
closer interdivisional collaboration. This adaptation gives rise to a matrix form of structure in
which vertical and horizontal formal relationships are recognized (Hodge et al., 2003).

The key advantages are:

 Improves decision-making by bringing a wide range of expertise to problems cutting

across department or divisional boundaries

 Replaces formal control by direct contact

 Aids development of managers by exposing them to companywide problems and

decisions

 Improves lateral communication and co-operation between specialists

 Can be adapted to a rapidly changing environment

 Facilitates adaptation to unfamiliar or unexpected problems

 Useful for a medium size organization with a modern number of products or task
centered Organization (Hodge et al., 2003).

The key disadvantages include:

 There is lack of clear responsibility

 There are clashes of priority between products

 Functions lose control or physiological contact

 Career development objectives may not be effectively realized

 It is difficult for one specialist to display or improve performance of other disciplines

especially in a multi-skilled team environment

 Project managers are relevant to impose authority since they might become subordinate
in later projects

 Employees might become confused by reporting to more than one boss

 Managers will need to learn to resolve interpersonal frictions hence need to train in
human relations skills

 Managers spend a lot of time trying to prioritize tasks

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  The complexity of the structure makes it difficult to implement successfully (Hodge et
al., 2003).

Questions to reflect on

1. Explain the usefulness of the key elements of structure to organizational effectiveness

2. Identify any organization that is within your reach and answer the following questions:

(a) What is its basic form of structure?

(b) What are the advantages and disadvantages of that structure?

(c) What changes should be adopted to make that structure more effective?

3. The government predominantly works through a functional structure. Discuss how this
structure enables and yet limits the government in discharging its functions effectively.
Recommend possible changes.

TOPIC THREE: THE CONTEXT OF ORGANIZATIONS

In this topic, we shall focus our attention to the context of organizations in terms of goals and
their effectiveness.

Lesson Five: Organizational goals

At the end of this lesson, you should be able to:

 explain the purpose of goals

 describe different kinds of goals

 explain the responsibility for setting goals

 discuss organizational goals at corporate and operational levels

 explain the responsibility of setting goals and the effectiveness of goals

The purpose of goals

Goals are central to organizational effectiveness. Organizational effectiveness is a good

indicator of the extent to which an organization endeavors to meet its goals.

Organizational goals serve four major purposes:

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  Goals provide guidance and a unified direction for people in the organization – people get
to understand where the organization is going and why or how important the terminal is

 Goal setting practices strongly affect other aspects of planning – effective goal setting
promotes good planning and good planning facilitates future goal setting

 Goals can serve as a source of motivation for employees in the organization – goals that
are specific and moderately difficult can motivate people to work harder, especially if
attaining the goal is likely to result in rewards

 Goals provide an effective mechanism for evaluation and control – performance can be
assessed in future in terms of how successfully today’s goals are accomplished (Hodge et
al., 2003).

Kinds of goals

Organizations establish many kinds of goals which vary by level, area and time frame (Hodge et
al., 2003). This is further explained.

Goals by level

Goals are set for and by different levels within the organization. The four basic levels of goals
are the mission, strategic, tactical, and operational goals.

Mission

An organization’s mission is a statement of the fundamental unique purpose that sets it apart
from other firms of the same type and identifies the scope of the business operations in product
and market terms. In brief, it is, the organization’s fundamental purpose for being.

Strategic goals

These are goals set by and for top managers of the organization. They focus on broad general
issues. For example, doubling sales revenue.

Tactical goals

These are set by middle managers. Their focus is on how to operationalize actions necessary to
achieve the strategic goals. For example, which products to launch.

Operational goals

This are set by and for all low-level managers. Their concern is with shorter term issues
associated with the tactical goals.

Goals set by area

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Organizations also set goals for different areas or function. For example, finance, production, etc.

Goals set according to time frame

Organizations set goals according to different time frames as follows:

 Long term goals-This have explicit time frames. At strategic level, long term often
means 10 years or more

 Intermediate term-They have open ended time horizon. At strategic level, this is
around, 5 years.

 Short term-at strategic level this is about 1 year

From the above, the meaning of the different time frames varies by level.

Responsibilities for setting goals

All managers must be involved n setting goals each should however have a responsibility for
setting goals that correspond to his or her level in the organization (Hodge et al., 2003).

The mission and strategic goals are generally determined by the board of directors and top
managers. Top and middle managers then work together to establish tactical goals. Finally,
middle and lower level managers are jointly responsible for setting operational goals.

Many managers also set individual goals for themselves this goal may involve, career paths,
informal work-related goals outside the normal array of official goals, or just about anything of
interest or concern to the manager.

Managing multiple goals

 This helps to avoid conflicts or contradictions among goals. It is achieved through

optimizing. This involves balancing and reconciling possible conflicts among goals. The
manager therefore must look for inconsistencies, and decide whether to pursue one goal
to the exclusion of another or to find a midrange target between the extremes (Hodge et
al., 2003).

Goals and effectiveness

To judge effectiveness from the degree to which an organization achieves its goals may itself not
be sufficient. Hence the need to look for other aspects that determine effectiveness such as:

 resources and effectiveness

 performance and stake holders (Hodge et al., 2003).

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Resources and effectiveness

From the open system approach, organizations must acquire resources from the external
environment. Such resources include material and labor to create intended organizational
output and are found in the external environment

According to the systems resource model (input model), the effectiveness of an organization is
when the organization acquires from the environment the resources necessary to carry out this
purpose (Hodge et al., 2003). Hence there is a clear connection between inputs to the system and
its performance. An organization must have inputs to create outputs.

Performance and stake holders

In assessing organizational effectiveness, it is vital to consider the satisfaction of key stake

holders. There is a belief that organizations are effective to an extent that the key stake holders
are minimally satisfied (Hodge et al., 2003). These are people with a definite and immediate
interest in the organization’s performance. They include stock holders (shareholders and equity
holders), managers, employees, creditors, suppliers, customers, regulators and community
members.

Questions to reflect on

1. Explain the usefulness of setting goals at both personal and organizational levels.

2. Describe the kind of goals that organizations generally set for themselves

3. Highlight the different time frames on which organizational goals are based.

4. Identify the various parties responsible for setting goals in organizations and the

nature of goals that they set.

5. Explain the concept of managing multiple goals

6. Explain the link between organizational goals and effectiveness

Independent Study Project

Identify any organization that is within your reach and establish the following:

(a) What is its mission?

(b) How does it accomplish its goal setting processes?

(c) To what extent has it been effective in achieving its goals?

(d) What constraints has it faced in its effort to achieve its goals?

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TOPIC FOUR: ORGANIZATIONAL SIZE GROWTH AND LIFE CYCLES

LESSON SIX

In this lesson, we shall focus our concern on the dynamic nature of organizations. Organizations
are not static or stagnant entities. They grow, shrink, and otherwise change over time. The life
cycle perspective of organizational change attempts to explain that, organizations change
sequentially over time as a function of their growing size, changing conditions and
organizational maturation. These sequential changes differ from planned organizational change,
which is the change intentionally undertaken by management to improve conditions in the
organization. With increasing size comes complexity. As an organization grows, its operations
and structure invariably become more difficult to manage. The manager’s challenge is therefore
to balance the advantages of size and the demands for complexity.

At the end of this lesson you should be able to:

 explain the meaning of organization size

 analyze the different stages in organization growth and size effects

 highlight the major advantages and disadvantages of small sized organizations.

Organizational size

There are diverse ways of defining organizational size depending on the special interest or
importance attached to it (Hodge et al., 2003). For example, the organization’s role in the
industry or economy-the focus may be on finance and market measures like, asset value (asset
worth), revenues or market share. We may also want to know the relative size of the firm
compared with others in the industry and therefore focus on market share, and concentration
ratios as indicators of size. Concentration ratios indicate the degree to which an industry is
concentrated in the hands of a few giants or dispersed among many smaller firms. Another
measure that may be considered to be useful in determining organization size is the number of
employees engaged by the firm. The larger the number, the bigger the size of the firm.

Stages in organization growth and size effects

In the same way, people change as they grow and mature, organizations experience different
passages of stages as they move through periods of growth (Hodge et al., 2003).

21
Organizations emerge, prosper, grow, stagnate, decline and sometimes die. However,
organizations differ in their stages of development. Organizations can also backtrack in their
growth path. Organizations become more complex and formalized as their size increases and
they mature.

We can identify four different stages that organizations go through as they grow:

 birth/entrepreneurial stage

 emergent structure

 formal organization

 dinosaurs and turn a round - giant organizations (Hodge et al., 2003).

These are further described in the following table:

Stage Characteristics Challenges

Birth/entrepreneurial Rapid growth; liability of newness (prone Survival

to many challenges).

Emergent Continued growth; balancing stability and Delegation and

Structure/Collectivity flexibility. responsibilities; professional
management.

Formal Slow growth; formal organization; Balancing needs for co-

organization/Formalizatio beginning of bureaucracy. ordination and control with
n needs for flexibility and
responsiveness

Dinosaurs / turn a round Slow growth or stagnation; large and Restructuring; reinventing;
complex; highly bureaucratic downsizing

Source: Hodge et al.(2003)

Major advantages and disadvantages of Small Sized Organizations

The following are the major advantages and disadvantages of small sized organizations:

Advantages

 They are efficiently managed

 Decision making process is faster

 They have simple structures

22
Disadvantages

 They suffer from inadequate funding

 They may find it hard to adopt costly yet more efficient technologies

 They largely depend on one or two individuals to lead them to success- this may imply
lack of diversified thinking and effective decision-making.

 They may not compete favorably in highly competitive markets because they lack the
benefits of economies of scale

Independent Study Project

Locate any one relatively old large organization within your reach. Study its historical
background, identify the different stages of growth that it has gone through and the challenges it
faced in each stage. Further explain how it overcame its challenges of growth.

TOPIC FIVE: THE FORMATION OF CULTURE

This topic explores the formation of organizational culture and its implications.

LESSON SEVEN

In this lesson, we seek to understand the different cultures inherent in organizations and the
stages of culture formation in organization as well as how culture impacts diverse aspects of an
organization. Cultures in organizations emerge and change as the organization changes.

At the end of this lesson, you should be able to:

 describe the perspectives of leading scholars in organizational culture

 explain some unique aspects of international cultural orientations

 describe cultural indicators and manifestations

 explain the effects of culture in organizations

Perspectives of Leading scholars in Organizational Culture

Four leading scholars provide substantial knowledge that leads us to better understanding of
organizational culture. They include:
1) Edgar Schein
2) Christian Scholz

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 3) Charles Forburn
4) Meryl Louis (Hodge et al., 2003)

Each of their perspectives is further explained.

1. Schein’s Stages of Culture Formation

People form groups in order to satisfy needs. Accordingly, they bring goals, values, and even
hopes to the group process and endeavor to find ways in which they can achieve what they want.
Schein suggests that groups progress through a series of stages that affect culture.

The first stage revolves around issues of dependency. The group looks for someone to give it
direction. The person selected to lead is indicative of many values and norms of the group or
organization. Leader characteristics such as age, training, background, gender, experience may
all be important in making considerations of who should lead the group.

Schein’s second stage of cultural formation involves the confrontation of intimacy, role
differentiation and peer relationship issues. Successful efforts in the first stage over authority
issues are likely to produce a sense of success and good feelings about membership likely to
carry over for an extended period of time. Early success can motivate employees to give greater
commitment and effort to the organization.

In the third stage, creativity and stability issues must be confronted. The group or organization
begins to cope with innovative approaches that brought its initial success. The innovation comes
into conflict with the needs for order and stability. Creative and innovative forces may be critical
factors in the formation of an organization, but they can also disrupt the order of the
organization. This clash is typical of many entrepreneurial firms.

Finally, the organization or group matures only to be confronted by issues of survival and
growth. The organization learns whether it is flexible and adaptable to changing conditions in the
surrounding environment, or rather its very survival will be questioned.

The stages of cultural development represent changed goals, values, and focus of the
organization. The underlying question is whether the organization can forge the kind of culture
that is needed to survive.

2. Scholz’s Typology of Culture Formation

Scholz’s argues that culture develops along three dimensions: evolutionary, internal and external.
These dimensions comprise the typology of Culture Formation (Hodge et al., 2003).

The Evolutionary Dimension

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Somewhat similar to Schein’s view that culture develops over time in a series of stages. Scholz
proposes that, a nascent culture is already in place and that subsequent stages are the result of
how the organization responds to challenges to the culture. He outlines five evolutionary stages.

1) The stable stage during which no change is contemplated.

2) The reactive stage during which minimal change is accepted.
3) The anticipating stage when incremental changes are accepted.
4) The exploring stage during which large amounts of change are possible.
5) The creative stage when continues change is possible.

However, not all organizations follow this sequence nor is anyone stage regarded better than
another.

The Internal Dimension of Culture

 This focuses on particular internal conditions operating within the organization that affect
the culture. For example, an organization using standardized production processes would
create conditions for a culture that is constant and process oriented. This results into a
consistency culture. Meanwhile, a professional organization with employees possessing
varied skills and high levels of professional expertise is likely to foster development of a
culture that emphasizes individualism and professionalism. This culture is referred to as a
clan or involvement culture. In this case, employee’s values and commitment to the
organization are central (Hodge et al., 2003).

The External Dimension

This is influenced by external environmental conditions. How organizational members perceive

and respond to those conditions play a critical role in the development of the culture (Hodge et
al., 2003). For instance, a company facing a complex and dynamic environment, is likely to
develop a culture that values flexibility, innovativeness and risk taking. The focus on external
environment can be manifested in two different ways: as an adaptability culture directed at
innovations or other attempts to change in response to the environment, or as a mission culture
with a focus on meeting customer needs.

Scholz’s model is somewhat more complex than Schein’s. He views organizational culture as
arising from three diverse sets of pressures: time, internal characteristics of the organization, and
external conditions in the environment (Hodge et al., 2003)

3. Fombrun’s levels of culture

Charles Fombrun identified the development of culture as forces operating at three major levels:
societal, industrial and organizational (Hodge et al., 2003).

25
 His view is that, organizational culture is a product of the broader culture in which organizations
are embedded. An understanding of the interactions of the three forces with characteristics of the
organization is vital for an accurate analysis of culture and for guidance on how to modify
culture. These levels are further explained:

The Societal Level

At this level, culture represents the values, attitudes, and meanings that members bring to the
organization (Hodge et al., 2003). This may be influenced by such social forces as the education
system, political system, economic conditions, and the social structure of the larger society. The
organization operates within this general cultural atmosphere. These conditions may influence
the strategies, mission, objectives, norms, and practices in the organization in subtle but real
ways. As such, a company’s strategy, products, and advertising must be consistent with the
community culture if the organization wishes to maintain legitimacy and approval. The societal
level is often an ethical, legal, and social guide to conducting business in a community.

The industrial level

 The essence of the industrial level of culture is best realized by considering the
similarities of cultures within and differences in cultures between industries (Hodge et al.,
2003). Often, there are dominant values or beliefs of an organization that are espoused
by a majority of organizations within an industry. Over time industries develop styles that
have a remarkable influence on such things as decision making, political stances, member
lifestyles and even dress codes. For example, the banking industry has had a unique and
prevalent way of doing business. At one time, banks were concerned exclusively with
efficiency, cost control and basic standard service (Hodge et al., 2003). Today, banking
is characterized by more extensive services, more aggressive marketing, and a customer-
oriented focus. The industry however is still characterized as conservative and formal.
Managers dress conservatively, avoid risk, and generally advocate fiscal and social
conservatism. Compared with the entertainment business it is completely the opposite as
the dominant values are more casual, flamboyant dress, high risk behavior, and fiscal and
social radicalism (Hodge et al., 2003).

4. Louis’s Multiple Cultures

 Meryl Louis suggests that organizations, especially large, complex ones often develop
different cultures at different sites within the organization (Hodge et al., 2003). Thus,
unique cultures may develop around different levels in the organization or within
different divisions or departments. Conditions, problems, or personnel at different sites
or locations can pressurize organizations to have different cultures. Also forces outside

26
 the organization such as those emanating from hired workers may bring in values, beliefs,
and norms derived from their neighborhood ethnic cultures (Hodge et al., 2003).

International cultural orientations

Geert Hofstede surveyed people from around the world concerning their work-related values
(Hodge et al., 2003). Hofstede identified five dimensions of international culture as further
explained in the table :

Cultural Dimension Description

Individualism- collectivism
Uncertainty Avoidance
Power Distance
Masculinity- Femininity
Time Orientation
Source: Hodge et al. (2003).
The degree to which individuals are expected to act
individually or to act out of consideration for the well being
of others in a family, group, team, organization, or country.
How society copes with uncertainty, how comfortable people
are with uncertainty. In low uncertainty avoidance cultures,
people embrace innovation and are more tolerant of unusual
or eccentric behaviors.
Degree of social and economic stratification in the society.
Societies with high power distance tolerate greater inequities
in the distribution of wealth, power, prestige and status.
Masculinity cultures maintain clearly separated gender roles.
Men are expected to be assertive and women are expected to
be nurturing. Greater emphasis is placed on work, careers,
and wealth acquisition. In feminine cultures gender roles are
less distinct and clearly defined. Feminine cultures place
more emphasis on relationship, physical environment, and
service to the community or family.
Some cultures tend to be highly focused on the present and
on short term horizons; others tend to be focused on long
term horizons and history

Recently, much discussion has focused on the national and organizational cultural differences
that distinguish Japanese and American organizations (Hodge et al., 2003). Several important
characteristics of Japan and Japanese culture contribute to the unique Japanese management
culture. First, history and Geography contribute to Japan’s emphasis on protecting its borders
from foreigners. Japan was essentially closed to foreigners until late in 19 th century (Hodge et al.,
2003). This has contributed to the homogeneity of the Japanese population and their fear and
mistrust of foreigners. Japanese culture is to a large extent based on Confucianism and
Buddhism. By contrast, the American culture is a product of largely open borders and
heterogeneity. Even though the protestant ethic plays a central role in American culture, the U.S.
was settled by diverse immigrant groups who brought with them their unique ethnic and national

27
cultures (Hodge et al., 2003). For example, there is the culture of Italian- American, German
Americans and Asian Americans.

The table below shows the contrast between Japanese and American Organizational Cultures:

Japanese Culture American culture

Emphasis on collectivism and groups
Emphasis on family and respect for authority
Emphasis on cooperation and harmony
Emphasis on patience, long-term results
Emphasis on humility and austerity
Source: Hodge et al. (2003)
Emphasis on individualism
Emphasis on individual and youth
Emphasis on competition, conflict, confrontation,
and differences
Emphasis on immediacy, short-term results
Emphasis on self-promotion and material wealth.

Organizations develop cultures within the context of their national cultures. An organization is a
citizen of a particular country, and therefore, the country’s dominant, norms, standards, styles,
and beliefs set the parameters in which an organization’s culture develops (Hodge et al., 2003).

Cultural indicators and manifestations

There are certain observable indicators and manifestations of culture as depicted in the table
below:

Manifestation Description
Rite Relatively elaborate, dramatic, planned sets of activities that consolidate
various forms of cultural expressions into one event, which is carried out
through social interactions, usually for the benefit of an audience
Ceremonial A system of several rites connected with a single occasion or event
Ritual A standardized, detailed set of techniques and behaviors that manage
anxieties, but seldom produce intended technical consequences of
practical importance.
Myth A dramatic narrative of imagined events, usually used to explain origins
or transformations. Also, an unquestioned belief about the practical
benefits of certain techniques and behaviors that is not supported by
demonstrated fact.
Saga A historical narrative describing the unique accomplishments of a group
and its leaders
Legend A handed down narrative of wonderful event that is based in history but
has been embellished with fictional details.
Story A narrative based on true events-often a combination of truth and fiction
Folktale A completely fictional narrative
Symbol Any object act event quality or relation that serves as a vehicle for
conveying meaning
Language A particular form or manner in which members of a group use vocal
sounds and written signs to convey meanings to each other.
Gesture Movements of parts of the body used to express meanings.

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Physical setting Those things that surround people physically and provide them with
immediate sensory stimuli as they carry out culturally expressive
activities
Artifact Material objects manufactured by people to facilitate culturally
expressive activities.
Source: Hodge, Anthony, & Gales (2003)

One can observe that, cultural manifestations are both a result of culture and a reflection of
culture.

Effects of culture in organizations

Five specific aspects of culture’s effect on organizations can be explored (Hodge et al., 2003):
direction, pervasiveness, strength, flexibility and commitment.

Direction

This refers to the way culture affects goal attainment. Culture can push an organization toward
its goals or away from them. That is, it can be consistent with organizational goals - a positive
force or inconsistent with goals - a negative force (Hodge et al., 2003). For example, a negative
attitude towards adopting innovations developed outside the firm. This might make the
organization spend more valuable time and money reinventing the wheel through research and
development.

Pervasiveness

This is the degree to which members share a culture. This implies that adherence to the basic
tenets of those cultures is widespread among members therefore a thick culture (Hodge et al.,
2003). If this type of culture is negative, it will be difficult for the organization to change it. For
example, the so called ‘African time keeping’ leading to lateness or delaying tactics.

Strength

Strength of culture refers to its impact on members. For example, some religious sects and
political organizations exercise a compelling force over their members. Such behavior is a
indicative of a strong culture (Hodge et al., 2003).

Flexibility

This indicates that a culture is adaptable to changing conditions. Organizations, particularly those
faced with changing and complex environments must retain flexibility to accommodate change
(Hodge et al., 2003).

Commitment

29
The culture of an organization also has impact on the degree of commitment exhibited by its
members. Commitment is a condition in which members of a group give their efforts, abilities
and loyalties to the organization and its pursuit of its goals in return for satisfaction (Hodge et al.,
2003).

Recommended Reading

Hodge B.J; Anthony, P.W., & Gales M.L. (2003). Organization theory: A strategic approach. 6 th
ed. Chapter 10.

Questions to Reflect on

1. Consider the diversity of leading scholars’ perspectives on organizational

culture. How do they agree and how do they differ?

2. Compare and contrast the Japanese versus American Cultures

3. Explain at least five Cultural indicators and manifestations that you have
encountered in your life time

4. Distinguish between positive and negative cultural effects in organizations.

Independent Study

Study and explain the diverse cultural indicators and manifestations in organizations. How are
they similar and how are they different?

TOPIC SIX: GROUP DYNAMICS

A common feature of all organizations is that work is usually accomplished in groups or teams.
Accordingly, groups play an important and pervasive role in organizations. The groups exist in vi
all forms of organizations – business and industry, schools and colleges, churches and other
religious organizations, games and sports clubs, and many others. A group is composed of any
two or more persons working together to accomplish a common goal in which they have a shared
interest (Robbins & Judge, 2007). For example, members of a football team or group play
together with the goal of winning a match. Their common interest is therefore to win a match.

Lesson Eight
In this Lesson, we shall explore the most important and pervasive role of groups in
organizations. At the end of the lesson you should be able to:
 explain the historical background to the study of groups
 identify six major classifications of different groups

30
  explain the reasons why people join groups
 explain the different stages in group development
 explain how group influence impact organizational behavior

Historical background to the study of groups in organizations

The study of small groups in organizations has preoccupied the interests of psychologists,
sociologists, and other social and behavioral scientists for a considerable time in history, with a
greater focus on task performance (McGrath, Arrow, & Berdahl, 2000). Heightened interest in
the study of groups in organizations evolved in Britain in 1918 during the industrial revolution
(McIvor, A.J., 1987). This was the time when the department of scientific and industrial research
and the Medical research council were asked to appoint a board to investigate industrial
conditions. The resulting institution was the Industrial Fatigue Research Board whose terms of
reference were to consider and investigate the relations of the hours of labor and other conditions
of employment, including methods of work to the production of fatigue, having regard to both
industrial efficiency and the preservation of health amongst workers.

Later the popular Hawthorne Studies overseen by the Harvard professor Elton Mayo, followed
between 1924 and 1932 in Chicago, U.S.A (Robbins & Judge, 2007). These studies highlighted
the importance of group norms and how they influence the group members.

Classification of groups
There are six major classifications of groups: formal groups, informal groups, command group,
task group, interest group and friendship groups (Robbins & Judge, 2007). These are further
discussed.

Formal groups
These are defined by the organization’s structure, with designated work assignments establishing
tasks. In the informal groups the behaviors that one should engage in are stipulated by and
directed toward organizational goals. For example, a six-member crew making up an airline
flight crew.

Informal groups
These are alliances that are neither formally structured nor organizationally determined. They
emerge naturally at the work place to fulfill the need for social contact. For example, three
employees from different departments who meet regularly to have lunch together.

A command groups

31
This is a formal group established and determined by the organization chat. It is composed of
individuals who report directly to a given manager. For example, a school principal and his team
of 15 teachers.

Task groups
These are also organizationally determined and refers to a group of people working together to
accomplish a job-related task. The task groups boundary, unlike that of the command group is
not limited to immediate hierarchical superior. It crosses over command relationships. For
example, if a university student is accused of a campus crime, it may require communication and
coordination of the dean of academic affairs, the dean of students, the registrar, the director of
security, and the student’s advisor. Such a formation would constitute a task group.

Interest group
This is a group with a specific objective with which each is concerned. For example, employees
may band together to seek for an improvement in working conditions, to support a peer who has
been fired, thus constituting a united body to further their common interest.

Friendship Groups
Think of the time were obsessed of getting into contact with pen pals across the world. Usually
you selected your pen pals on the basis particular interest that you could share in common. For
example, love for adventure, romance, sports and a diversity of other hobbies. Groups that often
develop because the individual members have one or more common characteristics are called
friendship groups. In organizations, they exist as social alliances that extend outside the work
situation. They may be based on similar age or ethnic heritage, entertainment and leisure time
interests, or similar political views.

Why do people join groups?

There are six major reasons as to why people join diverse groups:
1. Security – minimizing the insecurity of ‘standing alone.’
2. Status – joining a group perceived important by others provides recognition and status
3. Self- esteem – groups can provide people with feelings of self worth
4. Affiliation – groups can fulfill social needs
5. Power – there is power in numbers, what an individual cannot achieve is possible through
group action
6. Goal achievement – need to pool talents, knowledge or power in order to complete a job
(Robbins & Judge, 2007).

Stages in group development

Groups have been observed as passing through a standardized sequence in their evolution. This
sequence is referred to as the five-stage model of group development, even though research
32
indicate that not all groups follow this pattern (Robbins & Judge, 2007). However, it provides a
useful framework to understand group development.

The Five Stage Model

This model characterizes groups as proceeding through five distinct stages: forming, storming,
norming, performing and adjourning (Robbins & Judge, 2007).

Forming
This is characterized by a great deal of uncertainty about a group’s purpose, structure, and
leadership. Members are “testing the waters” to determine what types of behaviors are
acceptable.

Storming
This is one of intergroup conflict. Members accept the existence of a group of the group but there
is resistance to the constraints that the group imposes over individuality, it is like joining a well-
meaning religious group that demands that all its members must always dress in white. There is
also a conflict as to who will control the group.

Norming
The group structure solidifies and the group assimilates a common set of expectations of what
defines correct member behavior.

Performing
The structure become fully functional and accepted. The group energy shifts from getting to
know and understand each other to performing the task at hand.

Adjourning stage
For temporary, committees, or teams or task forces, there is a limited task to perform. Therefore,
at this stage the group prepare for its disbandment. Attention is focused towards wrapping up
activities. Members develop mixed feelings. Some are upbeat in a ceremonial mood because of
their accomplishments, while others might be mourning the loss of friendship gained in the
process of working together.

Impact of Group Influence on Organizational Behavior

Managers need to learn and understand that within organizations they must work with both the
formal and informal groups with all their varied differences (Robbins & Judge, 2007). The
Hawthorne studies established that, the informal organization is a network of personal and social
relations not established or required by the formal organization. Rather it arises spontaneously,
as people associate with one another. The emphasis within the informal organization is on people
and their relationships. Whereas, the formal organization emphasizes official positions in terms
of authority and responsibility. Informal power rests on a person whereas formal authority
33
attaches to a position and a person has it only when occupying that position. Thus, informal
power is personal, e.g. the degree of respect enjoyed by a manager as an individual, as opposed
to the fear expressed to him by subordinates because of his official position.

The emergence of a combination of both formal and informal groups in organizations creates
three effects that are different from managerial expectations:
1. Employees act differently than required. For instance, they may work slower or faster
than predicted or gradually modify a work procedure on the basis of their experience and
insight
2. Employees often interact with different people or with different frequencies than their
jobs require.
3. Workers may embrace a set of attitudes, beliefs, and sentiments different from those
expected by the organization. For instance, instead of being loyal, committed .and
enthusiastic about their work, some become disenchanted while others are openly
alienated. Managers therefore painfully learn about the informal activities, interactions,
and sentiments of employees in addition to the required ones (Robbins & Judge, 2007).
On the whole, the combination of emergent behaviors sometimes makes it difficult to predict
levels of employee performance and satisfaction. The managers must always have a strategy of
influencing informal groups in organizations to engage in functional behaviors that promote the
goals of the organization (Robbins & Judge, 2007). He or she must also have a strategy of
minimizing the damage that informal groups may cause to the organization e.g. advocacy for
strikes or boycotts of work and loss in productivity.

Recommended reading
McGrath, J.E., Arrow, H., & Berdahl, J. (2000). The study of groups: Past, present, and future.
Available from:
http://www.communicationcache.com/uploads/1/0/8/8/10887248/the_study_of_groups-
_past_present_and_future.pdf

McIvor, A.J. (1987). Employers, the government, and the industrial fatigue in Britain,1890-1918.
Available from:
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1007909/pdf/brjindmed00163-0004.pdf

Stephen P. R., & Timothy A. J., (2007). Organizational Behavior. 12 th ed. New Delhi: Prentice of India
Private Ltd.

Questions to reflect on

1. Explain the historical evolution of the study of group behavior in organizations.

2. How is the identification of various classes of groups useful to a manager in

practice?

34
 3. Which of the stages of group development is more complex to you and why?

4. Why should managers show keen interest to the impact of informal groups in
organizations?

TOPIC SEVEN: POWER AND POLITICS IN ORGANIZATONS

All organizations are made up of people who influence each other in many ways. One of the
greatest influences being the possession of power over others (Robbins & Judge, 2007). When
people in organizations want to amass power, they play politics and so organizations become
political- power entities. Sometimes the aspects of power and politics in organizations may be
viewed in the negative, but they do play an active role in the life of an organization.

Lesson Nine
In this lesson, we focus our attention to the nature of power and politics in organizations and
their influence on the life of organizations. At the end of this lesson, you should be able to:
 explain the concept of ‘power’ in organizations
 identify various sources of power in organizations
 explain how managers play power tactics
 explain the concept of ‘politics’ in organizations
 describe the factors contributing to political behavior in organizations
 explain how people respond to organizational politics

Power in organizations
Power is the capacity that one individual has to influence the behavior of another such that the
one influenced act according to the wishes of the person influencing him or her. This clearly
refers to superior- subordinate relationships in organizations whereby managers have power over
those below them. Power may exist but not be used. It is therefore a capacity or potential. Often
those in power result to revoking their powers when it is completely necessary, as for instance, in
a situation of anarchy or chaos when order has failed.

Sources of power in organizations

Seven sources of power can be distinguished (Robbins & Judge, 2007).
1. Formal power – based on an individual’s position in and organization e.g. chief executive,
supervisor or messenger.
2. Coercive power – this is dependent on fear that the person in power can unleash on others,
for instance inflicting pain, withdrawal of some privileges or forceful control over another
person. Hence the persons being influenced act in fear of the likely negative consequences
whenever they fail to comply.
3. Reward power - People comply with the wishes of another person because in doing so there
are positive benefits that follow e.g. promotion, pay increase or increase in fringe benefits

35
4. Legitimate power - this is the formal authority to control and use organizational resources.
For example, the chief executive has entire legitimate power over the organization’s
resources.
5. Personal power – this is power that comes from an individual’s unique characteristics
admired by others e.g. individuals who are generally extroverted and highly resourceful to
others.
6. Expert power- power that one has as a result of possession of expertise, special skills or
knowledge. For instance, university lecturers exercise expert power over their students.
7. Referent power – identification with a person who has desirable resources or personal traits
It is power that develops out of admiration and respect for another person.

Power Tactics
These are what people use to translate power bases into specific acts. Research has established 9
distinctive influence tactics (Robbins & Judge, 2007)
1. Reliance on one’s position authority or stressing that one’s actions are in line with
organizational policies or rules
2. Rational persuasion – presenting logical arguments and factual evidence to demonstrate
that a request is reasonable
3. Inspirational appeals – developing emotional commitment by appealing to targets values,
needs, hopes, and aspirations
4. Consultation – increasing the targets motivation and support by involving him or her in
decision making
5. Exchange – rewarding the target with benefits or favors
6. Personal appeals- asking for compliance based on friendship or loyalty
7. Ingratiation – using flattery, praise or friendly behavior prior to making a request
8. Pressure – using warnings, repeated demands, and threats
9. Coalitions – enlisting the aid of others to persuade the target

Among them, evidence shows that, rational persuasion, inspirational appeals and consultation
tend to be most effective.

Politics in organizations
Politics is a fact of life in organizations (Robbins & Judge, 2007). Organizations are made up of
individuals and groups with different values, goals and interests. This sets up the potential for
conflict over resources. For example, departmental budgets, work space allocation, project
responsibilities and salary adjustments. As people compete for access to these resources, they
play power and politics

Definitions on politics focus on the use of power to affect decision making in organizations or on
behaviors by members that are self serving but not organizationally sanctioned. Political
behavior in organizations therefore refers to activities that are not required as part of one’s
36
formal role in the organization, but that influence or attempt to influence the distribution of
advantages and disadvantages within the organization. Legitimate political behavior focuses on
every day normal politics e.g. complaining to one’s supervisor or bypassing the chain of
command. Illegitimate political behavior is extreme behavior that violates the implied rules of
the game. E. g., using all unorthodox means to drive one’s agenda.

Factors Contributing to Political behavior in organizations

These are of two categories: individual factors and organizational factors (Robbins & Judge,
2007).

Individual factors
There are certain personality traits, needs and other factors likely to be related to political
behavior. For example, employees who are high self-monitors, possess an internal locus of
control, and have a high need for power therefore more likely to engage in political behavior.
The high self monitor is more sensitive to social cues, exhibits higher levels of social conformity,
and is more likely to be skilled in political behavior than the low self-monitor.

Organizational factors
Certain situations and cultures in organizations promote politics. More specifically when an
organizations resources are declining, when the existing pattern of resources is changing, and
when there is opportunity for promotion. In addition, organizational cultures characterized by
low trust, role ambiguity, unclear performance evaluations, zero sum reward allocation practices,
democratic decision making, high pressures for performance and self-serving managers create
breading grounds for politicking.

How People Respond to Organizational Politics

People often result to two types of behaviors: defensive and impression management (Robbins &
Judge, 2007).

Defensive behaviors
They are reactive and protective behaviors to avoid action, blame or change.

Avoiding action – set of behaviors

 Over conforming – strictly interpreting the rules
 Buck passing – transferring responsibility or decision of execution to someone else
 Playing dumb – avoiding an unwanted task
 Stretching - prolonging a task
 Stalling – appearing to be more or less supportive

37
Avoiding blame- set of behaviors
 Buffing – attempting to project an image of competence and thoroughness
 Playing safe- evading situations that may reflect unfavorably
 Justifying – developing explanations to lessen one’s responsibilities for a negative
outcome, while apologizing to demonstrate remorse
 Scape- goating- placing blame for negative outcome on external factors that are not
entirely blameworthy
 Misrepresenting – manipulation of information by distortion, deception or selective
presentation
Avoiding change
 Prevention – trying to prevent a threatening change from occurring
 Self protection- acting in ways to protect one’s self interest during change by guarding
information or other resources

Impression Management
This is the process by which individuals attempt to control the impression others form of them.
Impression management may be identified as follows:
 Conformity – agreeing with someone else’s opinion to gain approval
 Excuses – giving an explanation
 Apologies – admitting responsibility of an undesirable event
 Self promotion- highlighting one’s best qualities
 Flattery – complementing others about their virtues so as to appear perceptive and
likeable
 Favors – doing something nice to gain approval
 Association – enhancing or protecting one’s image by managing information about
people and things with which one is associated (Robbins & Judge, 2017).

Recommended Reading
Stephen P. R., & Timothy A. J., (2007). Organizational Behavior. 12th ed. New Delhi: Prentice of India
Private Ltd.

Stephen P. Robbins and Timothy A. Judge (2017). Organizational Behavior. 17th ed. Chapter
13: Power and Politics. Available from:
https://is.muni.cz/el/1456/podzim2017/BKH_PSEK/um/povinna_literatura/Robbins__S._P.____
Judge__T._A.__2017_._Organization_behaviour.pdf

Questions to reflect on

38
 1. Distinguish between the two terms: ‘power’ and ‘politics’ in organizational
context

2. What is the justification for the exercise of power and politics in organizations?

3. Compare and contrast the defensive versus impression management behaviors.

Which of the behaviors are more effective in responding to organizational
politics?

TOPIC EIGHT: INFORMATION AND ORGANIZATIONAL DECISION-MAKING

Information processing and decision making are critical events in organizations. Indeed, certain
theorists suggest that information processing and decision making are at the root of every
organizational activity (Hodge et al., 2003).

LESSON TEN

In this lesson, we take a keen interest on the importance and relevance of information in
organizations. At the end of the lesson, you should be able to:

 explain the value of information

 analyze the steps in the information process

 explain the information management system and the decision-making models

The value of Information

Information is valuable to the organization only if it is useful in decision making and operations.
The more useful the information the more valuable it is. There are seven critical characteristics
of information that make it valuable to the organization - relevance, quality, richness, quantity,
timeliness, accessibility, and symbolism (Hodge et al., 2003).

 relevance - the most relevant information needed by the organization is that for strategic
decision making – major decisions that affect the long-term direction of the organization.
 quality of information – refers to its accuracy; representation of reality. information
may contain type i or type ii errors. a type i error occurs when the organization accepts as
true, a piece of information that is actually false. a type ii error occurs when the
organization accepts as false, something that is actually true.
 information richness – this refers to the carrying capacity of a particular method of
conveying information. methods that convey great meaning are referred to as rich, while
those conveying less meaning are lean. written forms of communication are referred to as
lean communication media whereas, spoken communications add to richness of
information. indeed, face to face communication provides the richest form of
information.
39
  quantity of information – adequate information is needed to make informed decisions
but too much of it causes information overload. when this occurs, decision authority
centers often ignore all the information provided.
 timeliness of information – information has time value. there is need to obtain
information early enough to facilitate timely action.
 accessibility of information – information is only valuable to decision makers when it is
accessible, therefore it must be available and relatively easy to obtain.
 symbolic value of information – information accords symbolic status to those in high
levels of the organization. this comes about as a result of the mere fact that a manager
who is well placed in the organization has access to or receives valuable information.

Steps in the information process

There are seven steps in the process:

 gathering information- obtaining necessary information from outside and inside

the organization
 reporting information – communicating information to the right person or unit
 analyzing information – extracting meaning from the information
 accepting information – acknowledgement by the unit receiving information
whether it agrees or disagrees with it
 storing information – keeping the information in some form or device such as a
file, or on computer disk or tape.
 retrieving information- stored information should be capable of being retrieved
whenever needed.
 using information – information should be gathered only if it is useful. there is
need to carry out information audit to determine if and how information is
actually being used (Hodge et al., 2003).

Managing the information process

Every organization should be concerned about managing information, in the same way it
manages other resources- people, money, materials, plant and so on. They must design an
effective management information system (MIS). This is a formalized system of making
available to management timely, accurate and relevant information for decision making (Hodge
et al., 2003).

Information and decision-making process

Information is the raw material that feeds decision making at all levels in the organization. Three
decision making models are explored (Hodge et al., 2003):

40
Rational Decision Making

Economists use simplified assumptions about human economic choices to model human
behavior. They employ the rational economic model of decision making. This model assumes
that decision makers gather perfect information available at no cost, use perfect rationality, and
arrive at utility maximizing outcomes. A utility maximizing outcome is one that provides the
decision maker with the best possible set of outcomes.

Bounded Rational Decision Making

The aim of Bounded rationality is to provide a satisficing outcome. This is an outcome of lesser
quality than a utility maximizing outcome. It is the first outcome that meets some minimum level
of acceptability. It may be a compromise between departments. It may be a decision preferred by
the most powerful department, even though a solution suggested by the lesser powerful
department is better. Most decisions in organizations will exhibit some degree of bounded
rationality.

Garbage Can Decision Making

This model is an attempt to characterize the complexity of organizations faced with multiple
decisions. Garbage can decision making was a term coined by researchers to portray the process
involved. It basically portrays the complex, ambiguous environment in which managers often
make decisions with a lot of uncertainty. Therefore, one would think of peering into a garbage
can and seeing problems, solutions, information, and participants swirling around in a random
fashion like worms. Using this model, decision makers can enter the decision process at any
point. The decision may even start with a solution in need of a problem. Just as in mathematics
you might get a problem like, the answer to a certain number when multiplied by 3 is 9. Find the
number.

Questions to reflect on

1. Explain the value of information to organizations.

2. Describe the unique characteristics of useful information

3. explain the steps in the information process and the importance of each step

4. Why should organizations manage information in the same way they manage
other resources?

5. Compare and contrast the various models of decision making. In your opinion,
which one is more effective?

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TOPIC NINE: INFORMATION TECHNOLOGY AND THE MORDERN
ORGANIZATIONS

Modern organizations are highly influenced and driven by information technology today. It has
been observed that, the introduction and use of information technology in organizations has
brought about profound changes in jobs and organization structures similar to those experienced
during the industrial revolution (Hodge et al., 2003). Managers must remain well informed of
day to day developments in this field. They must as well be aware of the massive losses that may
arise in their organizations if they do not effectively safeguard their computerized and networked
information systems, given the magnitude of Cyber crimes today.

LESSON ELEVEN

This Lesson focuses on the rapid change confronting modern organizations and how technology
is a key factor to this change and the need for continues organizational learning. At the end of
the lesson, you should be able to:

 Explain the concept of change

 Explain the dilemma of organizational change

 Explain the change process

 Explain the impact of technology on organizational change

 Explain the concept of organizational learning and change

The Concept of Change

The twenty-first century is a period of unprecedented change in organizational restructuring,

reengineering, downsizing, and other assorted changes (Hodge et al., 2003). Even during the
robust economy of the late 1990s, many large companies were shedding jobs at an incredible
pace. The economic slowdown in 2000-2001 has hastened the pace. Terms such as downsizing
and rightsizing may suggest a one-time fix, but many experts view this as an ongoing process for
organizations of the future. The biggest media questions are: What is organizational change? Can
we specify a definition that is broad enough to encompass the wide range of manipulations to
organizations about which we read? (Hodge et al., 2003)

Change is simply the alteration of the status quo

In a technical sense it occurs continuously; no moment is exactly like the one that preceded it.
For practical purposes, however, we are interested in significant, planned changes to the
organizational formation processes, changes to structure or design, changes to coordination
mechanisms, changes to people and roles in the organization, changes to culture, or basically
changes to any of the aspects of organizations (Hodge et al., 2003) . Forces for change are

42
everywhere; they can be found within the organization itself and they can be found in the
external environment.

The Dilemma of Organizational Change

Organizations face a dilemma with respect to planned change. On the one hand, organizations
desire to experience change in order to remain competitive, to adopt more effective and efficient
means of operation, and to remain in harmony with their environments. On the other hand,
organizations often resist change because of their desire for relative stability and predictability.
Organizations must have stable outputs, predictable costs and protection of their financial
integrity. One group of writers on organizational change have suggested that, successful
organizations have an inherent drive toward stability and increasing rigidity (Hodge et al., 2003).
However, this stability and rigidity may prevent an organization from learning about its
environment and adapting to changing conditions. A key concern is for the organization to meet
the needs for change and responsiveness while maintaining enough stability to prevent disruption
of operations. Therefore, the organization must find its place along the following continua:

Stability ………………………………………………………………………Rapid change

Predictability……………………………………………………………………Unpredictability

Staleness……………………………………………………………………………Innovation

Familiarity…………………………………………………………………………. Unfamiliarity

Boredom……………………………………………………………………………Energy

Certainty…………………………………………………………………………Uncertainty

Atrophy…………………………………………………………………………New strength

Source: Hodge et al. (2003)

An organization that maintains the status quo may find that it has a great deal of stability and
familiarity, but it may also find that the status quo generates staleness, boredom, and atrophy
(weakness). Change can bring new challenges, new markets, and new technology, but it can also
be a source of instability, uncertainty, and unpredictability (Hodge et al., 2003). Finding the
proper point on these continua to balance the desirable and undesirable consequences of change
is a critical challenge for managers.

The change processes

The process of changing an organization may be a complex and drawn-out affair that involves
many people, large amounts of organizational resources, and lots of time. Nonetheless, in many
respects, organizational change is much like the processes associated with any generic decision

43
process. The following are the 12 steps in planned organizational change process (Hodge et al.,
2003):

1. Scanning environmental and internal conditions

2. Recognizing the gap between current conditions and desired conditions
3. Crystallizing perceptions and assessment
4. Planning and analysis
5. Determining change goals
6. Determining change tactics and program
7. Unfreezing behaviors
8. Evaluating change plan
9. Adjusting or modifying plan
10. Implementing plan
11. Following up
12. Refreezing behaviors and attitudes

This gap between what is and what is desired becomes the impetus for change. People recognize
the gap and decide that something should be done about it. If the change process proceeds in a
planned fashion, the process will follow a series of specific steps. Following recognition that a
problem exists, managers perceive and assess the types of changes that they think are necessary,
the degree of change needed, and the speed of change required to narrow the gap. However,
because of bounded rationality and the culture of the organization, the nature of problem
identification and the assessment of the nature of change are likely to be biased and perhaps
incomplete. Five critical questions emerge (Hodge et al., 2003): How does management view
change? Do they find it threatening? Do they see it as a nuisance or a challenge? How much
experience does management have with change? Is the culture one that is receptive to change?
All of these questions emerge as managers attempt to assess the extent and type of change that
may be initiated.

Initiating Change

Not all change is initiated at the same pace. Change can be slow and deliberate or it can be quick
and radical. Up to this point, our focus has been on formally planned change. But change may
also emerge through an unplanned and unforeseen process. We briefly review these paths of
change (Hodge et al., 2003):

Planned incremental change

This is change that is evolutionary rather than revolutionary (Hodge et al., 2003). For example,
suppose an organization decides to institute a new human resources system. A human resources
system involves many facets of organizational life including recruiting, training, performance
evaluation, compensation, promotions and benefits. To change all these components at one time
may severely disrupt the organization. A planned incremental change strategy would approach

44
changing the human resources system one piece at a time. The process might begin with a
change in the performance appraisal system. Even that change may be phased in one department
or one division at a time.

The value of this approach is that disruptions to the organization would be limited and the
organization would be able to evaluate the new performance appraisal system in a limited
setting. Thus, if problems developed, it might be easier and less costly to correct them on a
small-scale introduction rather than if the change had been made in the entire organization.

Radical Change

Sometimes referred to as frame breaking change, is brought about by major changes in the
business strategy. Changing strategy typically requires a change in structure, people, and
organizational processes. Researchers suggest that organizations often go through long periods of
stability and then face a brief period of fundamental change in the industry that requires the
organization to undergo radical frame breaking change (Hodge et al., 2003).

Although major frame breaking changes may seem to be rare events, they are a little deceptive.
What managers and consultants find is that even incremental changes often have a chain reaction
in an organization. It is not usual to find that subtle changes in one area necessitate changes in
another area, and so on. Jack Welch, former chairman of the board at General Electric, notes that
change strategies often underestimate the impact and scope of the effects on the organization.
Thus, what sometimes begins as minor fine-tuning or adjustment to the organization ends up
being more kin to radical change (Hodge et al., 2003).

Unplanned change

This is change that just happens or emerges. Strategy and practice in the organization emerge in
the course of business as a stream of actions and decisions (Hodge et al., 2003). As so far noted,
organizations are dynamic and changing entities. The environments in which they are embedded
are also constantly changing. Thus, it is reasonable to assume that change takes place in
organizations regardless of whether it is guided by management. Organizations do not just
wander aimlessly; they change and respond to events in their environment, often with only
minimal conscious planning by management.

Types of organizational change

The following six sections identify and briefly describe discrete aspects of an organization that
can be changed. Though viewed as discrete parts of the organization, it is important to take note
that change in one area often demands change in other areas.

Goals and Strategy

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Most types of planned organizational change involve some modification of organizational goals
and strategy (Hodge et al., 2003). Some planned changes may emerge from lower levels of the
organization in response to local problems or conditions. Although these changes may not be
motivated by changing corporate-level goals or strategy, they are most likely to be driven by
local department or work unit goals.

Typically, changing the goals and strategy are but the starting point for changing other aspects of
the organization. Goals for new products would likely require research and development, new
production, and perhaps new personnel and new structures. Improving financial performance
could involve such changes as increased efficiency (i.e. less waste, greater productivity),
improved marketing, less overhead, or other sorts of changes. A goal of improving quality could
involve changes in virtually all aspects of the organization, from the skills and training of
personnel to the culture of the organization (Hodge et al., 2003). The point is that most large-
scale planned organizational changes begin with new or modified goals and strategy, but
changing the goals and strategy is just a preliminary step to further organizational change.
Therefore, further changes will involve people, technology, and organizational learning (Hodge
et al., 2003).

People

One of the more pervasive forms of change that has affected organizations around the world has
been downsizing. Although there are typically structural aspects to downsizing (the elimination
of layers of bureaucracy, merging of departments or divisions, etc.), the most obvious aspect of
downsizing is that the organization eliminates people. Management must decide on rules and
strategy for determining who will be cut from the organization as well as on the procedures for
actually eliminating personnel (Hodge et al., 2003).

Eliminating the wrong people from the organization can be costly. Critical skills and knowledge
may be lost. In some cases, firms that have downsized have belatedly realized that they cut the
wrong people and have faced the embarrassing task of rehiring released workers (Hodge et al.,
2003). How the organization releases the eliminated workers can have profound impact on not
only those who lose jobs, but also on those employees who remain on the job. Keys to successful
downsizing include keeping employees informed of possible job elimination, providing a fair
and just system for eliminating jobs, helping to place departing workers in new jobs, allowing
departing workers to retain self-esteem and dignity, and using cultural ceremonies and rites to
manage feelings and attitudes of remaining workers (Hodge et al., 2003). Creating a supportive
work environment can be an important step in smoothing the difficult process of laying off
workers.

Several other people changes are also available to the organization. The organization can recruit
new employees with particular skills or background. For example, with the increasing emphasis
on international business, many organizations are seeking potential employees fluent in several

46
languages and familiar with diverse national cultures. The emphasis on computerization and
automation has forced many organizations to seek employees with higher levels of education and
with specific computer training. Many firms use extensive and ongoing on-the-job training and
development to ensure that employee skills and knowledge are current and relevant (Hodge et
al., 2003).

New products and services may allow a company to enter new market niches that are less
crowded and less competitive. Some industries and firms are dedicated to new product and
service innovation. For example, the financial health of many large pharmaceutical companies is
based on their ability to generate new patented products. Once a patent expires, the company is
exposed to generic drug makers who do not bear the research and development costs and who
can produce generic versions of drugs at considerably lower prices (Hodge et al., 2003).
However, even before a patent expires, a drug company may face competition from another firm
making a similar, more effective, or cheaper product. Thus, pharmaceutical companies must
spend considerable resources and time developing new products.

There are no guarantees to success in product or service innovation, but a number of studies have
identified several features that are likely to increase the probability of success (Hodge et al.,
2003). These features include (1) close involvement with potential customers and identification
of customer needs; (2) products or services that are consistent with the strategy and skill base of
the organization; (3) creativity and scientific or technical expertise necessary for product or
service development and production;(4) entrepreneurial skills to sell the innovation in the
organization and to market it outside; (5) appropriate organizational structure to develop,
produce, and market the innovation; (6) project manager to oversee and coordinate development,
production, and marketing; and (7) an innovation champion – a person who can advocate and
represent a product or service innovation to top management (Hodge et al., 2003).

Technology and organizational change

There is an attempt to increase productivity and flexibility in manufacturing whereby many firms
are changing their technologies. Several trends in technology come under the broad heading of
advanced manufacturing technology or AMT (Hodge et al., 2003). Most of these involve the
use of computers and advanced communication technology. Some examples include computer-
aided manufacturing (CAM), computer-aided design (CAD), material requirements planning,

47
flexible manufacturing systems and cells (FMC), robotics and numerical control, automated
materials handling, and computer-integrated manufacturing. Examples of advanced
manufacturing technologies are further described (Hodge et al., 2003):

a) Computer – Aided Manufacturing (CAM): Technologies that involve the

computerization of various aspects of the manufacturing or production process, including
numerical control (use of coded instructions to run machinery) and robotics (use of
computer-controlled devices or manipulators to perform specific tasks in the
manufacturing process).

b) Flexible Manufacturing Systems or Flexible Manufacturing Cells: Two or more

machines teamed together to perform cutting or forming operations along with automated
materials handling. Arrangements of machines and machine pathways can be altered or
changed on relatively short notice to produce varied outcomes.

c) Computer – Aided Design (CAD): Use of computer and computer database to create or
modify product designs and engineering data. Often paired with CAM to produce
CAD/CAM, in which design and production systems are closely linked and design
information is used in machine control.

d) Material Requirements Planning: Computer-based inventory and production

scheduling system used to ensure timely supply of parts for production system. This may
be used as an integral part of a just-in-time (JIT) inventory control system.

e) Computer-Integrated Manufacturing: Combination of two or more of the above

individual advances under the control of a central computer system.

Process mapping

This is an attempt to change the technology by streamlining the process. It involves describing
the sequences of operations, tasks, machines, tools, people, and supplies involved in completing
a process (Hodge et al., 2003). For example, General Electric (GE) has used process mapping in
its Evendale, Ohio, jet engine manufacturing facility to schematically describe all the steps
involved in manufacturing a jet engine. The task of mapping is complex.GE took more than one
month to map the production of just one jet engine. The paperwork for this task was so

48
extensive that it wrapped around the entire conference room. When the mapping is successfully
completed, managers can see wasted or inefficient steps and bottlenecks in the process. The
mapping then becomes a diagnostic tool for rearranging a production process to operate more
smoothly.

Organizational learning and change

Most approaches to organizational change attempt to fix or change portions of the organization.
Even attempts to change the culture may only modify components of the organization –changing
values, beliefs, and expectations (Hodge et al., 2003). It is true that some of these changes can be
quite radical and may result in more efficient and effective organization.

Organizational learning offers a different perspective on change that addresses the fundamental
nature of an organization. The organizational learning perspective is an attempt to create an
organization that is able to continually monitor the environment and adapt to changing
conditions (Hodge et al., 2003).

The organizational learning framework proposes that organizations, much like people, have
memory and learn. Clearly organizations are made up of people who think and learn, but the
organizational learning framework goes a step further. Organizational memory and learning are
more than just the aggregate of individual memory and learning. Organizations have a memory
of what works and what does not work, as well as a rich history of past events. This memory is
stored in a variety of forms including documents, policies, procedures, reports, products,
databases, and most important, in the minds of employees of the organization-sometimes referred
to as human capital. The fact that people carry around a great deal of know-how in their minds,
often in the form of tactic knowledge, is underappreciated by most managers. This fact
sometimes becomes evident when organizations undergo downsizing and release employees with
key tacit knowledge relevant to the organization.

Several organizational authorities agree on five attributes of constitutes organizational learning

(Hodge et al., 2003):

49
 First, a learning organization develops systematic approaches to problem solving,
developing an understanding of what works and what does not work, learning from
experience, and learning from the best practices of others.

 Second, in a learning organization people must override past mental models. This is
sometimes referred to as ’thinking outside the box.’’ People must become accustomed to
trying new things, experimenting.

 Third, people in the learning organization must develop mastery, including developing
skills to be open with others. Like many of the approaches to organizational change that
we mentioned earlier, communication is key to learning.

 That communication is critical to the fourth characteristic of a learning organization-

transferring and disseminating new knowledge quickly and effectively throughout the
organization. Knowledge, information, and skills should not be hoarded or hidden from
other members of the organization.

 Finally, the learning organization should use the learning process and the transfer of
information to develop and pursue a shared vision.

The steps below further summarize the characteristics of learning organizations in that, they:

1. develop systematic approaches to problem solving to understand what works and

what does not work in the organization

2. develop the ability to “think outside the box’’; override old, outmoded ways of
thinking

3. develop personal mastery of skills

4. transfer and disseminate knowledge and information throughout the organization

5. develop a shared vision of the organization`s world (Hodge et al., 2003).

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Facilitating change
1. Researchers and practitioners have identified conditions that make change strategies
more likely to be successful. The list of characteristics presented below assumes that
the change plan has been clearly developed and documented (Hodge et al., 2003).
This should include a time line and action plan for implementation and goals or
benchmarks for performance expected.

Top management support

For any change strategy to be successful it must garner the support of top management. Without
that support, it is likely the lower level managers will view the change strategy with suspicion.
Moreover, it may be risky for managers to pursue action that lack top –management support
because they fear to be reprimanded or penalized when they make mistakes (Hodge et al., 2003).

Structural support

The ambidextrous (creative and innovative) organization possesses both organic and mechanistic
structural characteristics (Hodge et al., 2003). Organic characteristics are necessary for the
flexibility and creativity required to generate new ideas. Product development teams, research
and development departments, or teams and task forces devoted to developing change strategies
are given organic characteristics. However, change strategies that effectively diffuse through the
organization and become institutionalization (i.e. part of the daily fabric of the organization)
require some degree of formalization, standardization, and centralization -all mechanistic
characteristics. Although some organizations may simultaneously possess ambidexterity, other
organizations achieve similar results by switching from organic to mechanistic as they go
through the process of first developing a change strategy and then implementing it. One way of
achieving this ambidextrous nature on a temporary basis is through the use of teams or task
forces with specific responsibility for developing and implementing the changes (Hodge et al.,
2003).

Champions

It has been previously noted in the discussion of innovations that the role of a champion is to
oversee the project and to fight for it with others in the organization (Hodge et al., 2003). A

51
champion is an enthusiastic supporter of the proposed change. A champion can be critical to the
successful development and implementation of any type of change strategy. The champion can
answer questions, remove road blocks, and persuade those who resist.

Communications

Change does not occur in a vacuum. People need to be informed about the nature of proposed
change and how that change is likely to affect them. Resistance, confusion, and anger can be
minimised with clear and timely communication about the nature and impact of proposed
changes. This communication can include meetings, videos, documents, and briefing sessions
(Hodge et al., 2003).

Resources

Although there are stories of organisations successfully pulling of changes or innovations with
very limited resources, these are the exceptions rather than the rule (Hodge et al., 2003). Change
is risky for an organisation, and under financing a change strategy merely increases the risk. If an
organization is going to expose itself to the risk and uncertainty associated with change, it should
provide adequate resources, including personnel, equipment, facilities, consultants, and money.

Resources are a two-edged sword, however. Often an organisation in need of change lacks a
generous supply of resources. On the other hand, there is the notion of slack resources. Slack
may provide a cushion for experimenting and taking risks. However, an abundance of resources
may also lull an organisation into complacency, and it may fail to perceive the need for change
(Hodge et al., 2003).

Questions to reflect on

1. Explain the concept of change in organizations.

2. Provide your elaborate response to this question; “Can the organization meet the
needs for change and responsiveness while maintaining enough stability to
prevent disruption of operations”?

3. Explain the key steps in planned organizational change process

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 4. Explain how technology has severe impact on modern manufacturing

5. Describe the main features of learning organizations

TOPIC TEN: ORGANIZATIONAL DEVELOPMENT (OD)

Organizational development is the area of organizational change that aims to improve the social
functioning of organizations. As a discipline, it is a very broad area of study and therefore this
topic only introduces the concept of OD and briefly attempts to explain its usefulness to modern
organizations and how the OD efforts are to be managed to bear fruit over time. The entire topic
is covered in two lessons. These are the last lessons in this study unit.

LESSON TWELVE

This lesson focuses on the application of organization development techniques and tools
responsible for improving the social functioning of organizations. At the end of this lesson, you
should be able to:

 Explain the concept of OD and its key components

 Describe the techniques used in OD

 Explain the critical emphasis in OD

 Explain the application of action research model in OD

The concept of OD

OD is a subgroup of organizational change strategies that uses the knowledge of behavioral

sciences for planned interventions in organizational processes with a goal of increasing
organizational health and effectiveness (Gallos, 2006). Even though OD change efforts could
conceivably address any aspect of an organization, the approaches have typically focused on
improving and facilitating interactions among people in organizations.

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The focus has been on such factors as attitudes, trust, cooperation, acceptance and tolerance. The
goals being to improve communication among workers, to develop norms of trust and
acceptance, and to move toward collaboration and consensus.

Richard Beckhard gives a more elaborate definition of OD. He describes OD as an effort that is
planned, organization-wide, and managed from the top, to increase organization effectiveness
and health through planned interventions in the organization’s “processes,” using behavioral-
science knowledge (Gallos, 2006). He further explains five key components of this definition as
follows:

1. OD is a planned change effort. An OD program involves a systematic diagnosis

of the organization, the development of a strategic plan for improvement,
and the mobilization of resources to carry out the effort.

2. OD involves the total “system.” An organization-development effort is related to

a total organization change such as a change in the culture or the reward
systems or the total managerial strategy. There may be tactical efforts
which work with subparts of the organization but the “system” to be changed
is a total, relatively autonomous organization. This is not necessarily a total
corporation, or an entire government, but refers to a system which is
relatively free to determine its own plans and future within very general
constraints from the environment.

3. OD is managed from the top. In an organization-development effort, the top

management of the system has a personal investment in the program and
its outcomes. They actively participate in the management of the effort. This
does
not mean they must participate in the same activities as others, but it does mean
that they must have both knowledge and commitment to the goals of the
program and must actively support the methods used to achieve the goals.

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 4. OD is designed to increase organization effectiveness and health. To understand
the goals of organization development, it is necessary to have some picture
of what an “ideal” effective, healthy organization would look like. What
would be its characteristics? Numbers of writers and practitioners in the field have
proposed definitions which, although they differ in detail, indicate a strong
consensus of what a healthy operating organization is. An effective organization
is one in which:

 The total organization, the significant subparts, and individuals manage their work
against goals and plans for achievement of these goals.
 . Form follows function (the problem, or task, or project determines how the
human resources are organized).
 Decisions are made by and near the sources of information regardless of where
these sources are located on the organization chart.
 The reward system is such that managers and supervisors are rewarded (and
punished) comparably for: short-term profit or production performance, growth
and development of their subordinates, creating a viable working group.
 Communication laterally and vertically is relatively undistorted. People are
generally open and confronting. They share all the relevant facts including
feelings.
 There is a minimum amount of inappropriate win/lose activities between
individuals and groups. Constant effort exists at all levels to treat conflict and
conflict-situations as problems subject to problem-solving methods.

5. OD achieves its goals through planned interventions using behavioral-science

knowledge. A strategy is developed of intervening or moving into the
existing organization and helping it, in effect, “stop the music,” examine its
present ways of work, norms, and values, and look at alternative ways of
working, or relating, or rewarding. The interventions used draw on the
knowledge and technology of the behavioral sciences about such processes
as individual motivation, power, communications, perception, cultural norms,

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problem-solving, goal-setting, interpersonal relationships, intergroup
relationships, and conflict management
(Gallos, 2006).

Techniques used in OD

Several techniques can be used individually or as part of a larger change plan (Gallos, 2006). The
first step in OD intervention is often a diagnostic survey of worker attitudes about jobs,
supervision, and the general quality of work life that is used to identify problem areas. The
survey feedback to organizational members is used to initiate further change plans. The
feedback may provide a basis for managers to improve their management and leadership skills.
The survey feedback results may also be useful to a consultant in guiding process consultation,
interventions in which the consultant observes actual organizational processes like, group
meetings, teamwork and other work-related events. The consultants would then provide feedback
on ways to improve communications, leadership, decision making and conflict management. The
consultants might also intervene with team building activities that deal with methods for
improving communication and understanding among team or group members.

Another trend in OD intervention today is Diversity training. Organizations have become

increasingly diverse, with more women; racial, ethnic and religious minorities; foreign nationals;
and others whose life styles, beliefs or behaviors are out of the mainstream. Accommodating this
diversity has never been easy. Many large organizations face increasing managerial and even
legal challenges because of sexual or racial harassment, discrimination or other forms of
perceived unfair treatment.

The critical emphasis in OD

Organizations face multiple challenges and threats today- threats to effectiveness, efficiency, and
profitability, turbulent environments, increased competition, and changing customer demands,
and the constant challenge to maintain congruence among organizational dimensions such as
technology, strategy, culture and processes. Consequently, keeping organizations healthy and
viable is a daunting (complex) task for managers in today’s world (Gallos, 2006).

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Individuals in organizations equally face multiple challenges- finding satisfaction in and through
work, fighting obsolescence of one’s knowledge and skills, maintaining dignity and purpose in
pursuit of organizational goals, and achieving human connectedness and community in the
workplace. For employees, simple survival-continuing to have an adequate job is a major
challenge in light of constant lay-offs and cut backs. The heart-searching question that arises is,
are there any strategies available to help people and organizations cope, adapt, survive and even
prosper in these vexing times?

A variety of solutions exist of which OD is one of them. Basically, OD is a process for teaching
people how to solve problems, take advantage of opportunities, and learn how to do that better
over time. OD focuses on issues related to “the human side” of organizations by finding ways to
increase the effectiveness of individuals, teams, and the organizations human and social
processes.

The action Research Model

OD heavily uses the action research model. It is a combination of three important elements in
OD: The highly participative nature of OD, the consultant as collaborator and co-learner, and the
interactive process of diagnosis and action (Gallos, 2006).

The Action research model as applied in OD consists of seven steps:

1. A preliminary diagnosis of a problem in the organization

2. Data gathering from the client group (targeted organizational members)

3. Data feedback to the client group

4. Exploration of the data by client group

5. Action planning by the client group (formulation of problem solutions)

6. Action taking by the client group (implementing solutions)

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 7. Evaluation and assessment of the results of the actions by client group (Gallos, Ed.,
2006).

In the Action research process, the OD practitioner’s role is simply, facilitation. The model is
powerful; seeking the ideas and energies of a large number of people produces superior results
than one or a few managers attempting to wrestle with the problem. Participation by client group
members ensures better information, better decision making and action taking, and increased
commitment to the action programs (Gallos, 2006).

Action research yields both change and Knew Knowledge: change occurs based on the actions
taken, and knowledge comes from examining the results of the actions. The client group learns
what works, what does not work and why it does not work (Gallos, 2006).

Questions to reflect on

1. Explain the concept of organizational development

2. To what extent are the five key components of OD practicable in organizations?

3. How useful is the diagnostic technique to identification and solution of

organizational problems

4. Explain the key steps in the action research model

LESSON 13: MANAGING OD EFFORTS

For OD efforts to bear fruit, they must be well managed hence the need for concrete operational
goals as well as clear identification of needs or problems to be addressed. At the end of this
lesson, you should be able to:

 Describe five major operational goals in the management of OD efforts

 Describe the characteristics of OD efforts

 Explain the kind of organizational conditions that call for OD efforts

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Major operational goals in the management of OD efforts

Beckhard explains that, OD efforts usually have the following five major operational goals
(Gallos, 2006):

1. To develop a self-renewing, viable system that can organize in a variety of

ways depending on tasks. This means systematic efforts to change and
loosen up the way the organization operates, so that it organizes differently
depending on the nature of the task. There is movement toward a concept of
“form follows function,” rather than that tasks must fit into existing structures.

2. To optimize the effectiveness of both the stable (the basic organization chart)
and the temporary systems (the many projects, committees, etc., through
which much of the organization’s work is accomplished) by built-in,
continuous improvement mechanisms. This means the
introduction of procedures for analyzing work tasks and resource
distribution, and for building in continuous “feedback” regarding the way a
system or subsystem is operating.

3. To move toward high collaboration and low competition between

interdependent units. One of the major obstacles to effective organizations
is the amount of dysfunctional energy spent in inappropriate competition—energy
that is not, therefore, available for the accomplishment of tasks. If all of the
energy that is used by, let’s say, manufacturing people disliking or
wanting to “get those sales people,” or vice versa, were available to improve
organization output, productivity would increase tremendously.

4. To create conditions where conflict is brought out and managed. One of the
fundamental problems in unhealthy (or less than healthy) organizations is
the amount of energy that is dysfunctionally used trying to work around, or
avoid, or cover up, conflicts which are inevitable in a complex organization.
The goal is to move the organization towards seeing conflict as an inevitable

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condition and as problems that need to be worked before adequate decisions
can be made.

5. To reach the point where decisions are made on the basis of information
source rather than organizational role. This means the need to move
toward a norm of the authority of knowledge as well as the authority of role.
It does not only mean that decisions should be moved down in the
organization; it means that the organization manager should determine which is the
best source of information (or combination of sources of information) to
work a particular problem, and it is there that the decision-making should be
located.

Some characteristics of organization-development efforts

According to Beckhard, most successful organization-development efforts have the following
Characteristics (Gallos, 2006):

 There is a planned program involving the whole system.

 The top management of the organization is aware of and committed to the program
and to the management of it. (This does not necessarily mean that
they participate exactly the same way as other levels of the organization
do, but that they accept the responsibility for the management.)
 It is related to the organization’s mission. (The organization development effort is not a
program to improve effectiveness in the abstract. Rather it is an effort to improve
effectiveness aimed specifically at creating organization conditions that will improve the
organization’s ability to achieve its mission goals.)
 It is a long-term effort. Usually, at least two or three years are required for any large
organization change to take effect and be maintained. This is one of the major problems
in organization-development efforts, because most reward systems are based on
rewarding the achievement of short-term “profit” objectives. Most organization leaders
are impatient with improvement efforts which take extended time. Yet, if real change is
to occur and be maintained, there must be a commitment to an extended time, and a

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 willingness to reward for the process of movement toward goals, as well as toward the
specific achievement of short-term goals.

5. Activities are action-oriented. (The types of interventions and activities in which

organization members participate are aimed at changing something after the activity.) In
this respect, OD activities are different from many other training efforts where the
activity itself, such as a training course or a management workshop, is designed to
produce increased knowledge, skill, or understanding, which the individual is then
supposed to transfer to the operating situation. In OD efforts, the group builds in
connections and follow-up activities that are aimed toward action programs.

6. It focuses on changing attitudes and/or behavior. (Although processes, procedures, ways

of work, etc., do undergo change in organization-development programs, the major target
of change is the attitude, behavior, and performance of people in the organization.)

7. It usually relies on some form of experienced-based learning activities.

The reason for this is that, if a goal is to change attitudes and/or behavior, a particular
type of learning situation is required for such change to occur. One does not learn to play
golf or drive a car by getting increased knowledge about how to play golf or drive a car.
Nor can one change one’s managerial style or strategy through receiving input of new
knowledge alone. It is necessary to examine present behavior, experiment with
alternatives, and begin to practice modified ways, if change is to occur.

8. OD efforts work primarily with groups. An underlying assumption is that groups and
teams are the basic units of organization to be changed or modified as one moves toward
organization health and effectiveness. Individual learning and personal change do occur
in OD programs but as a fallout—these are not the primary goals or intentions.

Kinds of organization conditions that call for OD efforts

Beckhard points out that, an essential condition of any effective change program is that
somebody in a strategic position really feels the need for change (Gallos, 2006). As a general

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rule, if a change in people and the way they work together is contemplated, there must be a felt
need at some strategic part of the organization. A few of the kinds of conditions or felt needs that
have supplied the impetus for organization-development programs can be identified as follows
(Gallos, 2006):
The need to change a managerial strategy
It is a fact that many managers of small and large enterprises are today re-examining the basic
strategies by which the organization is operating. They are attempting to modify their total
managerial strategy including the communications patterns, location of decision making, the
reward system, etc.

The need to make the organization climate more consistent with both individual needs and
the changing needs of the environment

If a top manager, or strategically placed staff person, or enough people in the middle of the
hierarchy, really feel this need, the organization is in a “ready state” for some planned-change
effort to meet it.
The need to change “cultural” norms
More and more managers are learning that they are really managing a “culture” with its own
values, ground rules, norms, and power structure. If there is a felt need that the culture needs to
be changed, in order to be more consistent with competitive demands or the environment, this is
another condition where an organization development program is appropriate. For example, a
large and successful food company, owned by two families, had operated very successfully for
fifty years. All positions above the upper middle of the structure were restricted to members of
the family; all stock was owned by the family; and all policy decisions were made by a family
board. Some of the more progressive members of the family became concerned about the state of
the enterprise in these changing times. They strongly felt the need for changing from a family-
owned, family-controlled organization to a family controlled, professionally-managed
organization. The problem to be dealt with, then, was a total change in the culture of the
organization, designed to arrive at different norms, different ground rules, and so forth. This
required a major, long-term change-effort with a variety of strategies and interventions, in order
for people to accept the new set of conditions. This was particularly true for those who had
grown up within the other set of conditions.

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The need to change structure and roles
An awareness by key management that “we’re just not properly organized,” that the work of
(let’s say) the research department and the work of the development department should be
separated or should be integrated; that the management-services function and the personnel
function should report to the same vice-president; or that the field managers should take over
some of the activities of the headquarters staff, etc. (Gallos, 2006) The felt need here and the
problems anticipated in effecting a major structural or role change may lead to an organizational-
development effort.

The need to improve intergroup collaboration

As mentioned earlier, one of the major expenditures of dysfunctional energy in organizations is
the large amount of inappropriate competition between groups. When this becomes noticeable
and top managers are “hurting,” they are ready to initiate efforts to develop a program for
increasing intergroup collaboration.

The need to open up the communications system

When managers become aware of significant gaps in communication up or down, or of a lack of
adequate information for making decisions, they may feel the need for action to improve the
situation. Numbers of studies show that this is a central problem in much of organization life.
Studies of several executives have shown that a major barrier to corporate excellence is
communications problems, in terms not only of the communication structure, but also of the
quality of the communication.

The need for better planning

One of the major corollaries of the increasing complexity of business and the changing demands
of the environment is that the planning function, which used to be highly centralized in the
president’s or national director’s office, now must be done by a number of people throughout the
organization. Most people who are in roles requiring this skill have little formal training in it.
Therefore, their planning practices are frequently crude, unsophisticated, and not too effective.

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An awareness of this condition by management may well lead to an organization-wide effort to
improve planning and goal-setting.

The need for coping with problems of merger

In today’s world, it is more and more common for companies to merge, for divisions of
organizations to merge, for church organizations to merge, for subgroups doing similar tasks to
merge. In every merger situation, there is the surviving partner and the merged partner. The
human problems concerned with such a process are tremendous and may be very destructive to
organization health. Awareness of this, and/or a feeling of hurting as the result of a recent
merger, may well cause a management to induce a planned program for coping with the problem.

Need for change in motivation of the work force

This could be an “umbrella” statement, but here it specifically refers to situations which are
becoming more and more frequent where there is a need for changing the “psychological
ownership” condition within the work force. For example, in some large companies there are
planned efforts under way to change the way work is organized and the way jobs are defined.

Need for adaptation to a new environment

If a company moves into a new type of product due to a merger or an acquisition, it may have to
develop an entirely different marketing strategy. If a company which has been production-
oriented becomes highly research-oriented, the entire organization has to adapt to new role
relationships and new power relationships.

Questions to reflect on

1. Explain the operational goals encompassing OD efforts

2. Enumerate the characteristics of OD efforts

3. Highlight the various conditions in organizations that demand OD efforts

Independent Study

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Identify an organization of your own choice. Practically apply the action research model to the
organization so as to identify its inherent problems and prepare a program to help management
solve at least one of the problems identified.

Recommended Readings on OD

Gallos, V.J. (Ed). Organization Development; A Jossey Bass Reader

Hodge B.J.; William P. Anthony; and Lawrence M. Gales – Organization theory: A strategic
Approach. 6th ed.

Wendell L. French; Cecil H. Bell, Jr. Organizational Development: Behavioural Science

Interventions for organizational Development. 6th ed.

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